Give Me Back My Five Bucks

Currently browsing: investing

Breaking down my retirement portfolio

I’ve been asked to talk about my Retirement Portfolio and investments, so I’ll do my best. I’ve previously written a 3-part series on how I got started with investing (which you can read here: Part 1, Part 2, Part 3), but I’ve never really gone farther than that.

I explained in that 3-part series that for the first few years of investing, I was completely lost. Sure, I was saving a little bit of my money each month, but I really didn’t understand anything about what I was doing. 10 years later, I have just broken the $100,000 barrier to my Retirement Portfolio (yay!) and I feel like I have a good grasp on my goals and how to get myself there.

Breaking down the numbers

I’ve spoken a few times about how much I invest each month. I started off by putting away just $25/month into my RRSP while I was getting out of debt and working my first job out of college. Now, I’m investing about $1,760/month towards retirement.

It’s taken me a while to get up to that amount, but I’m really proud that over the past 10 years, saving for retirement has remained my biggest financial goal. And despite continuing to increase my contributions, I can still have a good life – which includes buying and (eventually) paying off our condo early, traveling multiple times a year, and never feeling deprived. Of course a lot of that has to do with the fact that I do make a comfortable income, but I didn’t always, and that has been a work in progress too.

So anyway let’s break down the money I’m saving:

  • TD Canada Trust RRSP ($650)
  • TD Canada Trust TFSA ($215)
  • Questrade TFSA ($270)
    • This account is made up of a couple of individual stocks I’m playing around with, but most of the account is in ETFs, following the Canadian Couch Potato ‘Assertive’ portfolio model for ETFs. I’m actually using only Vanguard ETFs as that is what he had listed a few years ago as his model portfolio, and am just going to keep going with that for now.
    • Contribute bi-weekly through auto-deduction, but only actually making purchases once every few months.
  • Corporate RRSP ($375)
    • This is my company’s retirement match program. I’ve chosen their ‘Aggressive’ portfolio model.
    • Contributions are automatically deducted from my bi-weekly pay cheques.
    • The amount listed above includes the corporate match amount.
  • Corporate SPP ($250)
    • This is my company’s Share Purchase Plan, where a % match is provided
    • Contributions are automatically deducted from my bi-weekly pay cheques.
    • The amount listed above includes the corporate match amount.

Basically I’m just doing whatever Dan Bortolotti tells me to do. :) Actually, while that really is true, I came to that conclusion after doing a lot of research on my own. Also, some of you know that I was lucky enough to get to work with a “fee only” financial advisor through my job with the Toronto Star, and after analyzing my finances, he offered up basically the same portfolio options. That gave me the confidence that I was on the right path.

Related: Is it possible to save too much for the future?

Taking advantage of opportunities

You can see that, while my work doesn’t provide me with a pension, they offer up a decent amount of free money to employees who want to take advantage of it. I’m currently maxing out the corporate match for both the RRSP and the share purchase plan, and will continue to do so because I thoroughly enjoy free money. :) Those contributions currently provide a really big chunk of my monthly retirement savings, which I’m extremely grateful for. And while I can’t really touch the RRSP, I’m basically free to sell my shares in the SPP.

Having fun

Having my Retirement Portfolio basically on auto-pilot might be a dream come true for some people, but I find it kind of boring. I love being active with my finances, and you can’t exactly do that with mutual funds and ETFs. :) So I give myself a (very) small allowance to play with buying stocks. Right now I’m only invested in two individual stocks for an amount totalling just over $2,000. It’s not a lot, but it’s enough to keep things fun and interesting (without jeopardizing my future haha).

Related: Why 20-somethings might have difficulties retiring by 65

The goal

My goal has always been to retire early. I am three years younger than RD and I want to be able to retire by the time he hits his retirement age of 57. Right now I’m on pace to retire by 52, and I feel like it’s not out of reach to be able to retire by 50 since my salary will (presumably) keep increasing as I continue on with my career. I may not retire once I’m financially able to do so, but just knowing that I could is, to me, the definition of financial freedom. So that will continue to be my goal.

What are your retirement and investing goals?

Why a Robo Advisor might be right for you

Note: this post is sponsored by ModernAdvisor.ca, but all views and opinions are my own.

02A couple weeks ago, I sold the first stock I ever bought. I bought it back in 2013, it peaked in 2015, and then plummeted shortly afterwards. It was a good lesson in staying patient, because it began to slowly rise again until I was able to sell it for a 61% profit.

I have a small investment portfolio with Questrade – most of my money is in ETFs for long-term (retirement), but I have about $4,000 to $5,000 set aside to play around with individual stocks. I haven’t decided what my next stock purchase is going to be, but I’ve definitely got my eye on a few. :)

Investing is fun for me. I love tracking stocks, rebalancing my portfolio, cheering whenever I get dividends, and seeing my portfolio slowly grow over time. But you know what? Not everyone shares the same passion for investing as me. And that’s where I think a robo advisor like ModernAdvisor.ca can fit in.

Why would you use a robo advisor?
What a robo advisor does is provide you with an easy way to create a solid investing portfolio. And I think this is super important because I have met so many people who are intimidated by investing, or they just don’t have the time and energy to devote to learning about investing, and then managing and growing their own portfolio. So they give their money to a bank and their money gets put into mutual funds instead (the average mutual fund fee in Canada as of 2014 was 2.41%!).

ModernAdvisor.ca uses Exchange Trade Funds (ETFs) which charge much lower fees than mutual funds – most of their portfolios cost less than 0.20%! And after adding in ModernAdvisor’s fee, the cost would be between 0.55% to 0.70%. That could save you 1.71 to 1.86% per year – which may not sound like much, but compounded over 20 or 30 years, and that adds up to some serious cash.

Who would use a robo advisor?

Admittedly, I’m still a DIY advisor (and I think I always will be). Robo advisors are not for me because I’m very comfortable setting up and managing my own portfolio, and since I invest in index funds and ETFs, my portfolio would end up looking quite similar to anything recommended to me through robo advising anyway.

My boyfriend and sister, however, would be the perfect fit for ModernAdvisor’s services. It’s the right balance between DIY investing (which not many people are that interested in), and having to pay the high fees of traditional banking advisors.

They’re both comfortable with online banking, but neither of them know much about investing. They’re not interested in spending hours learning about index funds (and how awesome Dan Bortolotti is) or balancing portfolios, and neither have time to have face-to-face talks with a bank advisor. But they still want their money to go as far as it can. Robo advisors can offer exactly what they’re looking for – a simple portfolio that will grow with the market, with no commissions or sneaky hidden fees.

Why ModernAdvisor?

There are quite a few Canadian robo advisors, so what sets ModernAdvisor apart from the rest of them? There are a few different reasons that come to my mind right away – user friendly website, loads of transparency, and they also have one of the lowest overall fee structures out of all the Canadian robo advisors.

Another big plus about ModernAdvisor is that maintaining their client portfolios goes beyond just rebalancing once or twice a year. They are constantly monitoring their portfolios to make sure they’re investing in the best ETFs for their clients. That means if there’s a better ETF that comes along, they’ll swap their clients into the new fund if it’s appropriate for them. And if you have any questions? You’ll be able to talk to a real human through online chat, phone, or e-mail.

But what I love best is the ability to create a trial account with ModernAdvisor without actually needing to deposit money, or give them your banking information. They’ll even go one step further and will invest $1,000 of their own money on your behalf for 30 days.

If the $1,000 earns money in those 30 days, you will get to keep all of the gains if you decide to open up an account and invest your money. Pretty sweet deal, eh?

AND as a special bonus to GMBMFB readers, ModernAdvisor has agreed to provide everyone with a $50 bonus for opening up a new account in addition to the free 30-day trial and the gains on the $1,000 they’ll invest for you.

Use Promo Code GMBMFB to earn your $50 bonus now!

Does anyone currently use a robo advisor?

How I started investing: Part 3

This is Part 3 of a 3-Part series in how I started investing. If you’re new here, please take a moment to read Part 1: The Beginning, as well as Part 2: DIY Investing!

Part 3: Figuring it Out

Since consulting with a financial advisor three years ago, I’ve made some significant changes in how I invest my money. In Part 2 of this series, I talked about how I rebalanced the asset allocation of my portfolio based on the financial advisor’s advice.

To recap, I was originally investing in 91.7% stocks, 2.7% bonds, and 5.6% cash.

The financial advisor suggested 70% stocks, and 30% bonds, so I readjusted my portfolio to reflect the following:

  • 20% Canadian equity
  • 25% U.S. equity
  • 25% International equity
  • 30% Canadian Bond

I continued to contribute to my TD e-series Funds for the next two years, and it wasn’t until 2013 that I decided I wanted to branch out into ETFs and individual stocks. But because I didn’t have much knowledge outside of these e-series funds, I started by doing a lot of reading online. Particularly Dan Bortolotti’s Canadian Couch Potato blog. I really liked how he laid out each mock portfolio, and I was already on the right track since my portfolio was very similar to Dan’s Global Couch Potato, Option 2:

Option 2: Using individual index mutual funds allows you to keep management fees low and customize the asset mix. TD’s e-Series funds are the best choice, but they are only available to investors who open an online account with TD Canada Trust, or through a TD Direct Investing discount brokerage account. The total annual cost of this portfolio is 0.44%.

When I started saving for retirement in 2007, I was only able to put away $25/month. But just that act of consistently putting away money got me into the habit of saving for retirement. So as my salary grew and my debt shrunk, I was able to contribute more and more. For the past few years, I have been contributing about $750/month towards retirement, and the plan is to keep increasing my contributions as my salary increases as well.

ETFs and Stocks

Early last year, I became interested in investing a little bit of money into the stock market – not enough to jeopardize my savings, but enough to make it interesting. So I started reading. I didn’t really know where to start, but I decided to pay attention to the Business section of the news. I took a look at what companies were doing, researched their stocks, and started tracking a few that I was interested in.

After about 3 or 4 months of monitoring, I decided to take a baby step and buy $1,000 worth of the stock I liked the best (October 2013) through Questrade. Within a few weeks, it plummeted 10%, and I felt pretty bad about it. But, I reminded myself that it wasn’t a lot of money, and the stock market was a lot more volatile than the mutual funds I was used to investing in. Since then, the company has been doing very well, and as of today, it is up 53%. :)

I’ve also invested in my first ETF: the Vanguard FTSE Canadian All Cap (VCN).

Moving Forward

Following the Couch Potato Model, in the coming years, I’ll be looking to advance from the Global Couch Potato over to the Complete Couch Potato portfolio:

The Complete Couch Potato includes additional asset classes while remaining easy to manage. This portfolio is really all the average investor will ever need: it includes almost 10,000 stocks in more than 40 countries, as well as government and corporate bonds of all maturities and additional diversification from real estate and real-return (inflation-protected) bonds. The weighted MER of this portfolio is 0.23%.

I hope to continue to play in the stock market as well – although to a much lesser degree than my mutual funds and ETFs. It was something I was intimidated of for many years, and I don’t think you can ever get over that fear until you take the plunge and make your first purchase. I’m still very cautious and I tend to monitor stocks for many months before buying. In fact, since my first stock purchase in October 2013, I’ve only purchased one other stock – which is up 9.5% since the beginning of the summer. But I have my eye on about 10 stocks at the moment, and I’m excited at making my next purchase. :)

I realized a long time ago that there’s no sense being scared of my money. With no company pension to help me reach my goal of early retirement (and with no confidence that CPP and OAS will be available to me when I retire), I’m going to have to work hard in order to achieve it on my own. Nobody taught me anything about investing, but I’m being proactive in learning and doing. Sure, I’ve made mistakes in the past, and I’ll likely continue to make mistakes. But we all have to start somewhere, right? And thankfully there are helpful blogs and websites out there to help us achieve whatever financial goals we’ve set for ourselves.

Related: What does retirement mean to you?

Anyway, that ends my 3-part series on how I started investing. :) If you have any questions or comments, please feel free to leave a message on this blog post in the comments section, or find me on Twitter at @krystalatwork.

Do you want to share your story on how you started investing? If so, please feel free to email me at krystalatwork@gmail.com. I’d love to hear from you, and potentially feature your story here on the blog.

Page 1 of 1612345»10...Last »

Buy the Book!

A beginner's guide for Canadians looking to get their financial life in order. Get great info on budgeting and saving, RRSP's and pensions, investing types, insurance, and where to go for additional resources.

Recent Tweets

Instagram

  • Games and pizza just might be the perfect way tohellip
  • Current mood
  • What an amazing weekend at the Canadian Personal Finance Conference!hellip
  • We decided to check out pivanewwest this evening  thehellip
  • We took Zoey to pawspetcentre this morning to get ahellip
  • Fanciest avocado toast Ive ever had! Nice catchup lunch todayhellip
  • Yep 2017 was a pretty good year! 1 Summited thehellip
  • Loving this gorgeous Christmas tree at the vanartgallery!

© 2017. Give Me Back My Five Bucks. All rights reserved. Powered by WordPress & Designed by Mike Smith